Applied Buys Kokusai For $2.2B

Applied Materials has signed a definitive agreement to acquire Kokusai Electric for $2.2 billion in cash from investment firm KKR.

For years, Kokusai Electric was a subsidiary of Hitachi. It sells epitaxial, thermal processing and other equipment. Then, as part of a complex business deal, KKR in 2017 acquired the semiconductor equipment business of Hitachi Kokusai Electric from Hitachi.

With the acquisition of Kokusai’s semiconductor equipment unit, Applied expands its customer base and gains a strong foothold in the batch processing equipment business, where a tool can process wafers in parallel. Applied’s strength is in the single processing equipment segment.

Kokusai’s customers include Samsung, TSMC, Intel and others. Kokusai has about 1,900 employees worldwide. It had sales of $1.486 billion in fiscal 2018, compared to $1.182 in fiscal 2017.

Following the close of the transaction, Kokusai Electric will operate as a business unit of Applied’s Semiconductor Products Group and will continue to be based in Tokyo, with technology and manufacturing centers in Toyama, Japan and Cheonan, Korea.

The transaction has been approved by Applied’s board. The transaction is expected to close within approximately 12 months and is subject to regulatory approvals and other customary closing conditions.

“Kokusai Electric has a strong culture of innovation along with excellent customer relationships and serves fast-growing areas of the wafer fab equipment market,” said Gary Dickerson, president and chief executive of Applied Materials.

“The opportunity to combine with Applied Materials will be very attractive for Kokusai Electric’s customers and employees alike,” said Fumiyuki Kanai, president and chief executive of Kokusai Electric.